OPINION | Union Budget 2025: Can the budget be the inflexion point we need in freeing up capital?

The Union Budget for FY2025-2026 could prove to be just the impetus we need to shore up consumer confidence and relieve liquidity stress in urban India.

The retail and dining-out sectors have been grappling with muted consumer demand for some time, and we expect some targeted policy interventions to reinforce the optimism our economy has felt over the last few years.

Strategic Economic Catalysts

The modern food service sector, including QSRs, has always played a key role in India’s journey toward self-reliance. 

Our industry’s ecosystem stretches from farmers, or our agricultural innovators, to last-mile delivery partners, making us crucial to India’s economic modernisation story. With supply chains that have direct upstream linkages with farmers and MSMEs, two of the largest sectors that provide the lifeblood to our economy, and a downstream value chain comprising logistics partners and stores, we have a multiplier effect on affiliated industries and livelihoods.

For example, the quick service restaurant sector, alone, valued at around USD 6.2 billion in FY2023, is expected to reach USD 15.1 billion by 2028, says consulting firm 1Lattice. It also estimates that every third food joint in India will be a QSR by 2028.

Despite less consumer spending, the QSR industry has shown resilience this past year with innovations to cater to even the most cost-conscious diner, and we are hoping the budget will bring about key changes for greater economic vitality.

Restoring consumer confidence

Our consumer market is set to become the third largest by 2026, surpassing Japan and Germany and trailing only the US and China.

Affluence and aspirations make ours one of the most coveted markets for consumer brands. UBS estimates there were 40 million affluent Indian consumers in 2023, and by 2028, there will be 88 million, undoubtedly driving premiumisation in the industry and mirroring the trajectory we witnessed in Southeast Asian tigers during their economic ascendancy.

The imminent budget is a critical opportunity to address the current cyclical softness in urban discretionary spending through policy measures that will ease the financial stress on consumers. It necessitates a calibrated approach to monetary policy.

The government will need to take on the calculated risk of easing interest rates for greater access to personal loans and revising personal tax exemptions to boost disposable income, even as inflation softens.

Stoking consumer spending will also stimulate private capital investment that must complement government spending in expanding capacity and generating employment generation to propel the economy forward.

Industry evolution

The restoration of input tax credits would catalyse a multiplier effect across the value chain, amplifying the government’s mission of inclusive economic development. Our analysis indicates that such policy recalibration could unlock more capital for organised players, capital that could fuel expansion into tier-2 and tier-3 markets.

Widening the network will mean we can reach more farmers and MSMEs for strategic partnerships, in turn bringing the financial empowerment they need to scale up and create more jobs. With just one such powerful stroke, the budget can help us become stronger allies in ramping up skilling and employment opportunities.

Amit Jatia is the chairman of Westlife Foodworld, master franchisee of McDonald’s in West and South India

Given the strategic value chain that modern food service establishments nurture, the sector’s formalisation with an industry status will benefit India’s socio-economic fabric and complement the government’s efforts towards generating employment and broader economic objectives. It would streamline regulatory compliance, improve our access to welfare programmes for those we employ, and enable us to encourage MSMEs and farmers to rise to better standards with concrete measures.

Recognition for sustainable and digital initiatives

The convergence of digitalisation, AI-driven personalisation, and sustainable consumption patterns is signalling how consumer businesses will have a fundamental shift ahead of them if they are to compete in the next decade.

Urban audiences are increasingly moving towards conscious consumption. A budgetary impetus such as the reduction in GST on eco-friendly materials could make a large difference in the sector’s ability to adopt sustainable packaging that matters. Some of us may have spearheaded the adoption of green initiatives, but with an incentivised approach, more players can start their journey in a cost-sensitive market, maintaining the delicate balance between affordability and quality.

A greener supply network can be established if even smaller suppliers adopt eco-friendly business practices. These may be initially capital-intensive but are bound to enhance consumer love for the industry.  Targeted incentives for QSR businesses that are ramping up their waste reduction initiatives and sustainable sourcing will encourage more to join in.

The imperative for digital transformation, too, must extend beyond mere presence on aggregator platforms. Leading QSR players globally allocate 3-4 per cent of revenue to digital infrastructure development—a benchmark Indian players must aspire to match. The convergence of offline and online channels, powered by predictive analytics and AI-driven inventory management, represents the next frontier of operational excellence. Budgetary incentives for tech investments will convince smaller brands to invest in this future-ready capability.

I remain confident that the Centre will continue to focus on job creation, skill development, and improving the ease of doing business through the Union Budget, in keeping with a visionary trend of the last few budgets. With supportive fiscal measures for boosting consumer and private capex and investments in digital infrastructure, the upcoming Union Budget can bolster our readiness to play our part in the country’s journey to become a USD 5 trillion economy.

Amit Jatia, the writer, is the chairman of Westlife Foodworld, which is the master franchisee of McDonald’s in West and South India.

The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.